Gilead Ordered to Pay Merck & Co. $200 Million in Damages Over Hep C Patent Dispute

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March 25, 2016
By Alex Keown, BioSpace.com Breaking News Staff

FOSTER CITY, Calif. The verdict is in. Gilead Sciences will pay Merck $200 million in damages for patent infringement for two lucrative hepatitis C drugs. The award is far less than the almost $3 billion Merck was initially seeking.

The news helped boost sales of shares of Gilead in after-hours trading on Thursday. The stock was up slightly, trading at $91.32 per share. Merck though saw a decline in after-hours trading, falling from $53.07 per share to $52.57 per share.

The award was announced Thursday afternoon and Gilead may plan to appeal the award, Reuters reported. Earlier this week, a jury upheld a judge’s finding that Gilead’s blockbuster hepatitis C drugs Harvoni and Sovaldi infringed on Merck patents. Merck sought 10 percent of revenue generated from the two drugs, which was nearly $20 billion in 2015.

Gilead argued its scientists were working on the hepatitis C compounds before Merck secured its own patents. The company argued that the compound has its roots at Pharmasset Inc. , which Gilead acquired in 2011 for $11 billion.

Carlsbad, Calif.-based Ionis Pharmaceuticals , which owns the patents in partnership with Merck, will receive 20 percent of the award.

“Ionis is an expert in developing novel nucleic acids for use as therapeutic agents. We used our expertise in a 1998 collaboration with Merck to discover and develop modified nucleosides that benefit patients with HCV. The patents derived from our work with Merck are another example of the strong intellectual property portfolio we have created around our pioneering work in antisense drug technology,” Stanley T. Crooke, chairman and chief executive officer of Ionis said in a statement before the award was announced.

Merck has its own recently approved hepatitis C drug, Zepatier.

Zepatier was granted breakthrough therapy designation for the treatment of chronic HCV genotype 1 infection in patients with end stage renal disease on hemodialysis and for the treatment of chronic HCV genotype 4 infection. Breakthrough therapy designation is a program designed to expedite the development and review of drugs that are intended to treat a serious condition and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over available therapy on a clinically significant endpoint.

Although Gilead took a hit from damages award, the company is not through developing additional treatments for hepatitis, even though Harvoni and Sovaldi provide near cures for the patients who used the drugs. In January, Gilead submitted a New Drug Application to the U.S. Food and Drug Administration for tenofovir alafenamide, an investigational, once-daily treatment for adults with chronic hepatitis B virus infection. The company is also continuing to use Sovaldi in combination with other drugs, including a triplet drug comprised of Sovaldi, velpatasvir, and a protease inhibitor for the treatment of genotype 3 HCV patients. Also, in the waning days of 2015, Harvoni was approved for expanded use in patients with genotype 4, 5 and 6 chronic hepatitis C virus (HCV) infection and in patients co-infected with HIV by the U.S. Food and Drug Administration.

The FDA also granted priority review to the company’s New Drug Application for an investigational, once-daily fixed-dose combination of Sovaldi and velpatasvir, an investigational pan-genotypic NS5A inhibitor, for the treatment of chronic genotype 1-6 hepatitis C virus infection. Gilead filed the NDA for SOF/VEL on Oct. 28 and the FDA has set a target action date under the Prescription Drug User Fee Act of June 28, 2016. The FDA has assigned SOF/VEL a Breakthrough Therapy designation, which is granted to investigational medicines that may offer major advances in treatment over existing options, Gilead said.

While highly effective, Harvoni and Sovaldi have been criticized for their price points, which can reach $95,000 for a 12-week regimen. A U.S. Senate report said the high cost of the drugs has also been damaging to Medicaid programs. According to the investigation, Medicaid programs spent $1.3 billion before rebates for the hepatitis C drugs to treat fewer than 2.4 percent of enrollees diagnosed with the liver disease. More than 700,000 hepatitis C patients on state Medicaid programs are still waiting to receive their medications.

Despite the price, Gilead’s hepatitis C treatments have proven to be highly effective since they were launched. Sovaldi has had a 90 percent efficacy in curing—not treating, but curing—the liver disease when used with other treatments—surpassing older treatments. It was because of that high rate of efficacy that Gilead was able to command such a high price for Sovaldi.

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